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What to keep in mind about borrowing under Trump

A sign warning of predatory payday lenders leans against a chair during a speech by Consumer Financial Protection Bureau Director Richard Cordray in Richmond, Va., in 2015. The bureau’s future is uncertain under President-elect Donald Trump
A sign warning of predatory payday lenders leans against a chair during a speech by Consumer Financial Protection Bureau Director Richard Cordray in Richmond, Va., in 2015. The bureau’s future is uncertain under President-elect Donald Trump Associated Press file

In just a few weeks, a new administration takes office. Promised steps to repeal or relax regulations instituted by the Obama administration will go into motion. Significant economic challenges often face new presidents and the transition can be felt from Wall Street to Main Street.

So what should regular people keep in mind as the change in power takes hold?

Let’s start with lending – an industry at the heart of America’s last recession. Here are some ways people can ensure they remain solvent and protected, regardless of President-elect Donald Trump’s policy agenda.

Only borrow what can be paid back. People should make sure a monthly car, mortgage or loan payment fits well within their overall monthly income. Do not lease a car for $499 a month if you can only afford $300. Do not agree to repay student loans quickly if you need more time.

Borrow against a personal asset if you can. People who can use a car or house as collateral can get lower interest rates and better terms. For consumers, it also helps to avoid taking on a lot of unsecured debt to pay off other expenses. For lenders, it diminishes the opportunity to sell a subprime loan.

Be vigilant about understanding the terms of any agreement. Contracts, by design, can be lengthy and complicated. Borrowers are well within their rights to ask for a line-by-line explanation. Make sure to investigate a lender with seemingly good rates if you haven’t heard or read anything about them. Trusted lenders receive official accreditation from industry groups, public sector watchdogs and consumer ratings.

It’s expected that the Consumer Financial Protection Bureau and the Securities and Exchange Commission will become less aggressive in combating private sector rule-bending. Many lenders will use fewer regulations to market riskier loans. Interest rates will likely fluctuate, and the risk of defaults will almost certainly rise.

To survive a new administration geared toward deregulation, consumers will need to play a bigger role in protecting their own finances. People hoping to buy a car, pay off or refinance student loans or take out another mortgage will need to take extra steps to ensure a deal is the right one.

Toby Russell is president of Shift, an online automobile marketplace based in San Francisco. He can be contacted at info@shift.com.

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